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Airlines in a digital world

The mobile-first mandate is arguably the most significant consumer trend of recent times.

Overview

How can airlines compete more effectively?

Senior executives from some of the world's leading airlines say this is their top business challenge, according to a recent Accenture study that examines digital readiness at airlines around the world. Both traditional and low-cost carriers need new strategies to differentiate themselves from competitors and digital can be a key different in a hyper-competitive market.

But "Digital" is not an end in itself. It's a tool that can fundamentally change how airlines operate, instead of a way to modernize isolated functions. Digital enables a new level of data-driven collaboration across all airline functions collectively—connected people, processes, technology and culture to deliver a more seamless customer experience.

To really compete, digital innovation must touch every aspect of the airline business, evolving "digital strategy" into "business strategy." Accenture has identified five priority areas to help Airlines take a holistic approach and land at a digital destination:

Real Time Insights

Personalization based on full 360-degree
customer insight is a myth for most airlines.
And that is fine.

Airlines have never had a shortage of transactional data about their customers. Today, digital customer interactions provide new data points about customer behaviors that airlines can combine with insights from both internal sources (such as reservation systems) and external sources (such as social media).

With data storage continually getting cheaper, airlines have a clear opportunity to store and analyze vast amounts of customer data, using it to create offers and personalize the customer journey. We recommend that airlines take this opportunity to build and enrich their customer databases. After all, travelers expect personalized, made-just-for-me travel experiences today.

Not surprisingly, all of the executives who participated in a recent Accenture digital readiness survey say that their companies are “actively engaged” in digital technology initiatives designed to create a 360-degree view of the customer. And that makes sense. But is it sufficient?

"...if you look at somebody like Amazon or if you look at somebody like Uber, if you look at some of the other examples out there, the simplicity of the way that they interface with their customer, with their guests. The way that they're able to offer a very customized experience. The way that they're able to provide an experience that's relevant, that's completely relevant to their user. Those are all things we need to learn from, adapt and look for ways to really leapfrog other industries here." — Airline Executive

Personalization based on full 360-degree
customer insight is a myth for most airlines.
And that is fine.

Airlines have never had a shortage of transactional data about their customers. Today, digital customer interactions provide new data points about customer behaviors that airlines can combine with insights from both internal sources (such as reservation systems) and external sources (such as social media).

With data storage continually getting cheaper, airlines have a clear opportunity to store and analyze vast amounts of customer data, using it to create offers and personalize the customer journey. We recommend that airlines take this opportunity to build and enrich their customer databases. After all, travelers expect personalized, made-just-for-me travel experiences today.

Not surprisingly, all of the executives who participated in a recent Accenture digital readiness survey say that their companies are “actively engaged” in digital technology initiatives designed to create a 360-degree view of the customer. And that makes sense. But is it sufficient?

"...if you look at somebody like Amazon or if you look at somebody like Uber, if you look at some of the other examples out there, the simplicity of the way that they interface with their customer, with their guests. The way that they're able to offer a very customized experience. The way that they're able to provide an experience that's relevant, that's completely relevant to their user. Those are all things we need to learn from, adapt and look for ways to really leapfrog other industries here." — Airline Executive

Products and Services

The physical product will be a more
important competitive weapon than ever
as prices “commoditize.”

It is hard for many people to remember what air travel was like before the digital revolution. In the last decade, the growth of the Internet, multiple digital channels—and the disruptors with business models that leverage them—have had a profound effect on the industry.

Travelers once had to rely on a travel professional to find and compare all of the best airfares and schedules. But what was once hidden is now out in the open. Companies like Expedia, Priceline, Hipmunk and Google Flights empower travelers to be their own travel agent.

“The disruption has to do with the shopping and booking experience. When a customer has access to Google Flights and the many other methods of searching for a flight, there is a proliferation of choice and extreme transparency that is disruptive to the way that business was traditionally done,” explains an airline executive who responded to our digital readiness survey. “And it’s ever changing, so we have to stay on top of where our customers are, how they’re booking and what they’re seeing.”

The physical product will be a more
important competitive weapon than ever
as prices “commoditize.”

It is hard for many people to remember what air travel was like before the digital revolution. In the last decade, the growth of the Internet, multiple digital channels—and the disruptors with business models that leverage them—have had a profound effect on the industry.

Travelers once had to rely on a travel professional to find and compare all of the best airfares and schedules. But what was once hidden is now out in the open. Companies like Expedia, Priceline, Hipmunk and Google Flights empower travelers to be their own travel agent.

“The disruption has to do with the shopping and booking experience. When a customer has access to Google Flights and the many other methods of searching for a flight, there is a proliferation of choice and extreme transparency that is disruptive to the way that business was traditionally done,” explains an airline executive who responded to our digital readiness survey. “And it’s ever changing, so we have to stay on top of where our customers are, how they’re booking and what they’re seeing.”

Open Platforms

Airlines are not the ones driving their customers’ travel plans. To be relevant they need to open up to the ecosystem.

Many low-cost carriers around the globe have proven that airlines can stimulate demand for air travel and create markets where they did not exist before. However, the reality is that most airline customers base their travel plans on a specific destination and reason for traveling. They are not flying just for the sake of flying. People are travelling because they want to—or because they have to.

Airlines are not the ones driving their customers’ travel plans. To be relevant they need to open up to the ecosystem.

Many low-cost carriers around the globe have proven that airlines can stimulate demand for air travel and create markets where they did not exist before. However, the reality is that most airline customers base their travel plans on a specific destination and reason for traveling. They are not flying just for the sake of flying. People are travelling because they want to—or because they have to.

Connected Operations

Digital is the long-awaited opportunity
to break down silos in an airline, creating
operational synergies for the benefit
of the customer.

Customer experience design is a hot topic in the airline industry. The continued advancement of digital technologies makes “the art of the possible” in this area very exciting. While many airlines talk about customer experience design and develop innovative ideas, at the heart of a passenger’s priorities is a safe, smooth, on-time journey. What is the value of receiving a favorite welcome cocktail, mixed exactly to your liking when your bag is not on the flight with you, or the plane is delayed because line maintenance was informed late of a defect?

We observe that many airlines have concentrated their digital investments on the “customer-facing” side, like websites and mobile interfaces. Whilst that will remain very important, it is key to not neglect the operation and recognize the vast potential for efficiency and cost reduction that digital technology can bring in this industry.

Traditionally it has been difficult for airline carriers to cooperatively react to unforeseen circumstances because of organizational silos. “When a plane has to be towed, we have mechanics working, flight attendants working and a gate attendant. Right now, they do not communicate as a team. I’d love everyone to have the same information and be collaborating,” says one airline executive who we interviewed as part of a digital readiness study.

Transformation Into a Digital Airline

Becoming a digital airline requires more than automation, it requires new business models, technology models and operating models.

Many airlines are adopting digital tools and technologies. They are digitizing individual processes, equipping ground staff with tablets, growing their social media presence, moving data to the cloud or providing mobile access to travel documents. These moves are crucial steps in any airline’s digital journey. But winners will go much farther to become truly digital airlines.

“The top barrier to digital adoption is internal organizations’ concern about changes to organizational structure or functions.”
— Airline Executive

How can airlines move past the barriers and take flight on a new digital future?

A day in the life

Mr. Roberts’ assigned seat cannot recline anymore due to a technical malfunction. The flight attendant cannot re-seat Mr. Roberts so rather than providing the option of filing a complaint post-flight, the attendant enters the complaint on a tablet in real-time and is able to offer compensation on the spot, relieving the customer service department from addressing at a later time. While entering the detailed issue, a message is created to alert the maintenance department.

Line maintenance picks this up and is awaiting the plane with the right parts and tools, so the risk to delay turnaround is minimized.

Imagine the possibilities with the Internet of Things—a network of intelligent, connected devices. Seats know when the recline function does not meet specification and trigger an alert for repair. Predictive analytics could even identify a possible issue with a specific seat type based on variables like usage patterns. The same crew and engineer would be able to use their digital devices to access their self-service human resources environment, reducing manual forms processing.

How can airlines move past the barriers and take flight on a new digital future?

Dirk-Jan Koops is a managing director in Accenture’s Global Airline practice, and the Global Digital lead for the industry segment. Dirk-Jan’s experience includes many different areas of the airline and travel business, including strategy, revenue management, marketing, sales, distribution, loyalty management, business innovation and e-commerce.

In his 20-year career, Dirk-Jan has worked with a variety of different airline companies across the globe. Dirk-Jan holds a Master’s degree in Business Economics from Rotterdam Erasmus University.

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